CONSIDERING THE VALUE OF SOCIAL SOFTWARE TOOLS

With companies’ recent attempts to engage employees and customers through advanced software solutions and collaboration tools, IT departments often have difficulties deciding which platforms to use and justifying the investments made. In this respect, it is vital to the planning process and the decision-making process to perform a thorough cost-benefit study and preferably to understand the Return on Investment (“ROI”) of the platform, before embarking on the project.

Given that the results of these collaboration tools, which are sometimes intangible in nature, often are not directly measurable, simple ROI techniques are insufficiently appropriate for capturing the (long-term) results of these tools.

Below we provide an overview of how the Value Measuring Methodology (“VMM”) developed by Booz Allen Hamilton, in conjunction with Harvard University can be applied to social software tools. Much of this overview is based on valuable insights from the ‘Highlights on VMM’ by the Best Practices Committee of the Federal CIO Council (October 2002).

The need for measurable results

According to a recent study by Bazaarvoice and the CMO Club, the true expectation of chief marketing officers is that they want measurable results from social media.

In most organisations, the following requirements tend to apply when embarking on new ventures and projects:

• Senior management should be provided with the information necessary to communicate priorities and to establish consistent measures for evaluating existing or proposed initiatives;
• The venturers and project managers should have visibility of the relevant needs and priorities of stakeholders and customers;
• Risk and risk mitigation should be considered early in the development process, before other alternatives are defined; and
• Value measures should be provided (including metrics and targets) that capture project value, guide definition of alternatives, and facilitate on-going performance and results-based management.

How to achieve measurement

Given the complexities of accounting for costs and identifying risk in traditional ROI calculations, the VMM offers a solution for measuring value in technologically advanced systems, such as software solutions built using Web 2.0 and developed in order to benefit from social collaboration.

THE VALUE MEASURING METHODOLOGY

Background

In order to define, capture and measure value associated with electronic services, Booz Allen Hamilton together with Harvard University in January 2002 published the first version of VMM. Following its publication VMM has been improved and tested in a real-world environment. Given the complexities of accounting for costs and identifying risk in traditional ROI calculations, VMM offers a solution for measuring value in technologically advanced systems, such as software solutions built using Web 2.0 and developed in order to benefit from social collaboration.

Purpose and approach

VMM was designed to be used by governmental organisations, for example in e-Government initiatives, but it can be applied by organisations wishing to maximise shareholder value as well, when deciding whether to invest in electronic services. The purpose is to demonstrate the benefits of a project to a variety of stakeholders.

According to the Best Practices Committee of the Federal CIO Council (2002), whilst it is preferred to use VMM at the start of a new project, it may also be used in later phases, in order to evaluate the effectiveness of the project, or to decide on the feasibility of its continuation. All through the lifecycle of a project, VMM can be used in order to justify spending, re-evaluate objectives and performance, or validate management controls. During this process, employees from across all functions and decision-making levels should be involved.

VMM is based on public and private sector business and economic analysis theories and best practices. It provides the structure, tools and techniques for comprehensive quantitative analysis and comparison of value (benefits), cost and risk at the appropriate level of detail. VMM produces an outline, guiding the process for the selection, design analysis and management of an investment.

A method for quantifying and comparing value, cost and risk

VMM is a solid foundation for a project and offers insight into the possible alternatives. According to the Best Practices Committee of the Federal CIO Council (2002) in their analysis of the value proposition, VMM:

• Allows measurement and comparison of baseline and ongoing evaluations of value, risk and cost;
• Provides a quantitative understanding of value through calculation of metrics, including ROI;
• Provides a clear picture of how value and cost are affected by risk;
• Allows strategic selection of initiatives to include in an organisation’s investment portfolio;
• Provides insight into the interrelationships of value, cost and risk;
• Produces quantified measures of value, cost and risk to guide the continuing selection, management and evaluation of an investment;
• Provides a better understanding of variables to justify an investment or alternative course of action;
• Addresses the needs of stakeholders, including the public through analysis of alternatives; and
• Supports development of an IT investment portfolio that balances value, cost and risk.

For social software tools, VMM offers a complete and quantitative approach to capturing their value and deciding on investment and feasibility. It focuses on all stakeholders and takes into account the possible alternatives. Also, VMM considers the effects of uncertainty (risk) on the outcome of the project.

IMPLEMENTATION OF VMM

The basic steps involved in implementing VMM are:

• develop a decision framework;
• alternatives analysis;
• pull the information together; and
• communicate and document.

We have developed in Fyronic a structured approach and methodology for these four steps, which will be of assistance to organisations that are embedding Social Media and Enterprise 2.0 tools in their strategy for engagement and collaboration with their various stakeholders.

We would very much welcome comments on this approach.  We can be contacted at by email at Fyronic or via Twitter.

David Demetrius (@Demeto) & Chris Demetrius (@Chris_LD)

Much is written about adoption of Enterprise 2.0, but adoption is nevertheless slow in most cases.  My belief is that this is largely because those selling the idea to top managment are not hitting the right buttons.  As a former Chairman and CEO of several companies and  a company director for over 30 years, I think I know what would have convinced me to adopt E2.0, had it existed at that time.

How not to sell it

There are several ways to ensure that all but the most geeky techies on the management team will NOT buy into the concept.

• Don’t call it Enterprise 2.0: This sounds too gimmicky.  It doesn’t convey any message that revenues and profits will increase any time soon.
• Don’t use the word ’social‘: CEOs know that it is good for employee motivation for them to have a happy social life, but most of them believe that (apart from Christmas parties and occasional staff drinks) this is something best kept out of the office.
• Don’t emphasise the technical points: Most CEOs do not want to hear about iPads or whether iPhone or Blackberry is better for accessing Twitter when traveling.  And if you descend into discussions about bandwidth, you’ll have lost them completely!

What buttons should you hit?

Instead of the above, I strongly recommend that you concentrate on the following messages.

• Talk about engaging with stakeholders: This is something CEOs understand and know they need to do.  They see stakeholder engagement as one of their key roles in life, be it with employees, customers, suppliers or whomever.  A system that makes this simpler and frees up some of their own time for other activities will be very attractive.
• Emphasise the benefits of collaboration: CEOs know innovation is important.  They have been brought up under the ‘Change or die’ maxim.  Providing them with a collaborative system to innovate more effectively will appeal to them. Real life examples (of which there are many) of companies cutting time to market of new products will impress them.
• Explain the alternative: You can’t sell E2.0 using simple ROI as a measure (any more than you can calculate the ROI of having a roof on the office), but you can point out the costs and risks of NOT incorporating E2.0 in the business.
• Kill the security question early: One of the major concerns of CEOs is that any social media application will put the company at serious risk of leaks of confidential data. Explain early that this is something that clearly has to be avoided, but that there are excellent existing tools for ensuring this (quite apart from clear company policy guidelines, which the CEO will hopefully confirm are already in place).

I hope this helps.  As I think of other suggestions, I’ll tweet them.  (@Demeto)

David Demetrius (Partner and co-founder of Fyronic)

Fyronic is organising a seminar about the use Enterprise 2.0 and Social Media.

This seminar will help you understand how to use new Social Media and Enterprise 2.0 tools (e.g. LinkedIn, Facebook, Twitter, Yammer, Social Networking, wiki’s, blogs, folksonomies …) to increase interaction between yourselves and the various other parties you deal with (members, employees, customers, partners etc.)

It will provide information on the relevance of such tools to your organisation. Emphasis will be on the functionality of the various tools, rather than the technical requirements.

If you want to ensure the sustainability of your organisation, if the use of Social Media and related tools are not already part of your strategy, they certainly should be!

The seminar will be held in English.
Date: Tuesday 6th July, 15:30 – 17:30 (followed by drinks and refreshments)
Venue: British Chamber of Commerce in Belgium, Boulevard Bischoffsheim 11, 1000 Brussels

To Register please send an email with your details register@fyronic.com

Here is a whitepaper explaining what Enterprise 2.0 and how Fyronic helps organisations to use the power of collaboration platforms.

It also includes an introduction in the method we use for implementing Enterprise 2.0 projects.

The method is based on Ross Dawson’s framework for Implementing Enterprise 2.0 in his book: Implementing Enterprise 2.0 but is our own vision on it.

Many thnx to Ross, for his groundbreaking work.

You can download our whitepaper here: Fyronic – Enterprise 2.0 Implementation an Introduction

Now that the ‘buzz’  around wave has calmed down a bit (it’s not gone, on the contrary, look at Mashable’s Wave news ), they start to use the real-time technology in other Google applications : Docs.

Yesterday, Google announced that it now is possible to edit document with several people at the same time. Sounds very Wave, right? (Google Docs online documents with real-time collaboration ).

For wiki users collaborating on documents is not new. The real-time aspect however is new. Google again adds useful feature to their already fine application set in the cloud.
This powerful real-time feature combined with chat orVoip calls makes it even more easy to produce information with a group of people wherever they may be.

(Source : The Official Google Blog, The next generation of Google Docs)

On LinkedIn’s Enterprise 2.0 Group there’s an interesting discussion going on about whether businesses are making the same mistakes as they did previously with KM, Collaboration..You can find it here.

Here’s my contribution to it:

Reading through this conversation, I see a lot of valid points as to why KM did not measure up to the expectations and how E2.0 is different.

Some of the things I have learned in the past 1.5 years studying E2.0 and the reactions of companies to it, are the following :

Although E2.0 is IT based, it’s not about the tools, it’s about the people using them and about solving business problems. So if E2.0 is going to be successful, one must demonstrate clearly what problem it really solves. There are quite a few benefits to E2.0 solutions but you have to find the one that appeals to the person in front of you. For some it will be easier collaboration of their teams, for others it will be email clutter reduction.

The success of an E2.0 project does not depend primarily on the successful implementation of the IT tools involved. Installing and configuring a E2.0 platform, and even integrating it into the existing IT environment is not rocket-science.

What will define the success or failure, in my opinion is how the platform is activated and nurtured throughout the organisation. It needs to be properly planned and coached and evaluated.

But this is not new. It is the case with any IT integration that requires change of people.
Just like any other IT system (and it still involved new tools) an E2.0 platform needs to be integrated seamlessly into the IT Architecture of the organisation. No IT manager or CIO is going to allow a proliferation of stand alone tools.
But more importantly, change management is of crucial to any new technology investment. In E2.0 projects especially, people are the driving force, not IT, not one department, but the whole organisation. And of course, for that you need the support of an executive level manager.

But we know all that. Selling it is the hard part. Convincing people is what it comes to, I think.
We require people to change, we require business culture to change, and that it the hardest thing to do. People don’t want to change unless they see clearly what’s in it for them. And that is still the greatest challenge.

Franky Redant